What is a Business Plan and Why Do You Need One?

A business plan is a living, breathing document that will grow and change along with your business. (Click to Tweet)

This time of year, I really get into high gear and start planning for my next year. I put together all the goals and milestones I am looking to break through. Usually I work through my BIG goals within the first few months. I firmly believe it all comes down to focus and planning.

What is a Business Plan and Why Do You Need One?

When most people think of writing a business plan, they envision a long, extensively detailed document with reams of data and financial forecasts. While that may be the requirement for people seeking outside funding, a business plan doesn’t have to be all that complicated to be effective. It provides the blueprint for how you intend to build your business, so the plan only has to be as long as you need, depending on the size of your business. Use your own business plan to map out yours goals, action plans and financials while significantly increasing your chances for success.

Who needs a business plan?

The most common use for a business plan is to get funding from a bank or loan organization for a new or existing business. This is where you’ll end up needing that long document that supports all aspects of your plans and why you believe they’ll succeed. Writing a business plan of this nature can be an ordeal and can slow down the start of your business, but it’s a necessity if you need someone else to loan you money.

Both online and offline business owners often create a business plan on a yearly basis to get themselves organized for the next year. It’s a way of taking stock of their progress, examining what’s working, and laying out goals and plans for the year to come. Almost all of the very successful business owners will tell you that they create business goals and action plans on a regular basis, sometimes as often as once a month.

In addition, if you have been struggling in your business or are considering something new, the entire process of creating a business plan will help you see where you can be most profitable. It will also tell you where you are going wrong and need to change.

But definitely don’t get all freaked out and overwhelmed by the process. It is important that you are completely aware of where you are and where you want to go. For most holistic practitioners, you can definitely use a 1-2 page business plan that covers the basics and allows you to see a full picture of your business.

What are the key components of an online business plan?

Most business plans are comprised of the following parts. If you are creating a proposal for a business loan, you’ll be given more precise requirements. But for your own online business, these components should be plenty sufficient.

Description of your business model and target market. What kind of business are you implementing and who are your target customers?

Unique selling proposition. What do you have to offer that makes you different from everyone else?

Business goals. What are your specific, measureable goals that you want to achieve and when?

Marketing Plan. What marketing strategies will you put in place and what is their timeline?

Action Plan. What are the tasks you need to complete and when?

Financial forecast and budget. How much is all of this going to cost on a monthly basis, and what kind of revenue do you expect? How long will it take to break even and make a profit?

When should you create a business plan?

A business plan is a living, breathing document that will grow and change along with your business. When first starting a new business, it helps determine if you have a good, financially viable idea. At the beginning of each year, it helps you to plan out your goals and strategies. Of course, if you need to raise money, people will want to see a detailed plan.

However, remember that you need to revisit your business plan regularly. I like to spend 15 minutes once a week, 30 minutes once a month and a hour every quarter, this allows me to make micro changes in my plan as I am moving forward. This allows me to flow better with the opportunities that come my way.

Your business plan serves as your blueprint for success, and everyone running a business can benefit from creating one – whether you are working online or offline. It doesn’t have to be the long, formal document that many business organizations prescribe. Instead, let the level of detail be determined by how complicated your business is and whether you need outside funding.
Photo Credit: Keoni Cabral via Compfightcc

About Lori Lynn Smith

Lori Lynn Smith is a passionate and an authentic teacher who shares her real life experiences about creating a more nurturing and fulfilling lifestyle.